The Golden Compass - a very short review

Bloodless bear fights? Lord Asriel unambiguously good? Godless villains? The ideas and the busy plot of Northern Lights were always going to be hard to condense into a movie. But the trouble with the Golden Compass is that tries to take on the additional challenge of being a kids movie suitable for US box office success. You can't think too much. You can't offend the Christians. You mustn't traumatise the kids. In the end the additional burdens are too much.

Heck, it was still a fantasy movie based on a magic book. I enjoyed it - I could hardly not have. But I was hoping for a whole heap more.

Bank Run!

At LRB John Lancaster has a very good run down of the sub-prime mortgage crisis, the Northern Rock debacle and the trouble with derivatives. The prognosis? no one knows yet. Things may be ok; they may also end up very messy.

How messy? Will Hutton advises us that at least one central banker intends to spend his Christmas holiday reading The Great Crash.



Central Bankers haven't just been reading either: plans are already being enacted to - hopefully - stave off a credit crunch and cascading collapses. The scary thing is that there is no guarantee that they will work.

At a slightly more abstract level, the thought of governments riding to the rescue has Matt of TVHE worrying about moral hazard: if state institutions keep bailing out investors when they get it wrong, won't this simply encourage more risky behaviour in the future?

Personally, I'm worried about a different moral issue: fairness. When things go right financial institutions profit handsomely. When they go wrong tax payers foot the bill. Profit is privatised, risk is socialised. It's a great example of markets and the state colluding to keep the wealthy wealthy.

And yet, if central banks don't intervene the ensuing collapse will hurt the poor more then the prosperous, the innocent as much as the guilty. All those people who had their life savings in Northern Rock did nothing wrong. Do we really want to punish them?

The dilemma is a real but it also has a potential solution: regulate financial markets much more aggressively in the first place. If you we did this, then we might find ourselves juggling unpleasant options on the edge of cliffs slightly less often.

Liberation?

Liberation offers a different sort of socialist take on NZ politics.

For example, Bryce Edwards, it's author, argues against the electoral finance bill and against the state funding of political parties. He musters a lot of evidence - some of it intriguing but, to be honest, his key arguments don't make much sense to me.

Edwards is opposed to state funding of political parties, in part, because - in his opinion - it divorces parties from their grass routes membership leaving us with a professionalised political class. As evidence for this he notes that active party membership for many New Zealand political parties has declined in recent years. The trouble with this argument is that he doesn't - as far as I can see (and I haven't read everything he has written) - provide much evidence other than hearsay that one has lead to the other. There is certainly not enough evidence to convince me that the decline in political party membership is not just a reflection in the general decline in traditional associational life occurring in developed nations. And if this is the case, then state funding has filled an important vacuum - which otherwise might have been filled by business money.

Edwards also argues that money doesn't buy elections, citing amongst other examples the case of ACT who have spent a lot only to see this not reflected in electoral results. This is enough to convince me that money certainly isn't the sole factor in determining outcomes. But it's not enough to convince me that it isn't a factor. What we really need to know is how ACT would have done in those same years with funding levels similar to the Greens - rather less well I suspect.

Edwards also points out that plenty of business money goes to Labour as well. This is a good point to make. But - to me at least - this just strengthens the for regulation on private donations. If both parties are reliant on business donations is this cause for complacency?

There is some other interesting stuff in there but, overall, Edwards just doesn't convince me that we need regulations and the like to ensure a transparent democratic process.

Precisely

Tax cuts? No Right Turn says it all.

Can't Think of a Name for this Post

Under my very brief definition of idealists, Tim, offers a not quite so brief but very interesting series of points on idealism among politicians:

The discussion was in a slightly different context to you: we were thinking not about what defines an idealist, but about how a politician who was also an idealist would act. The motivation was Australian politics, and whether Rudd's perfect 'positioning' in order to win the election would be dumped after winning power. 'Positioning' purely in order to maximise your vote (which seemed like Rudd's strategy) seemed to us to be almost the precise opposite of idealism, and we were curious as to whether Rudd would in fact dump those carefully positioned policies in favour of more ideal-driven (or maybe ideological) ones.

As far as I know, political science contrasts idealists with 'realists', but I'm not sure I ever understood that label properly. It seemed to us that the guy at the other end of the spectrum - the purely vote-maximising politician - could instead be labelled a 'cynic', and that the two types of politicians inhabiting either end of the spectrum were defined as follows:

I’ll just butt-in here to note that a better term than cynic is probably demagogue.

An 'idealist' politician begins their choice about what policy stance to take with an existing set of ideals, or moral rules. The idealist's policy stance is then determined by their interpretation of which policies they think best satisfy those ideals, given the nature of the world (the facts, the science, the ways people respond to incentives, etc etc).

A 'cynic' politician begins their choice about what policy stance to take with the sole 'ideal' of maximising their own chance of re-election / their own consolidation of power / their own benefit. The cynic's choice of policy is determined by their interpretation of what the majority of voters (or the 'median voter') will vote for or accept.

So both types 'derive' a policy stance, but from fundamentally different goals: ideals vs self-interest. Anyone else on the spectrum can be characterised by the relative weight given to 'broad ideals' (the sole goal of an idealist) versus 'the self interested ideal' (the sole goal of a cynic).

My friend pointed out that (as a stylised fact) the policy stance which wins elections is that which attracts the vote of the 'median voter'. Consequently, by a natural selection process, idealists will be weeded out unless the policies they derive happen to sit close to the median. The remaining politicians will differ only in their interpretation of where the median voter lies (and thus what the 'self-interest maximising' policy stance is).

However, you would only subscribe to this argument if you believed that politicians (idealists and cynics) were able to have NO effect on what the voting population, and thus the median voter, wants. Idealists might survive if they could convince the median voter to support a policy stance which is close to that which is 'derived' by the idealist from his set of ideals. We both agreed that there is plenty of evidence of politicians (unfortunately mostly of the cynic type) influencing the median / swinging voter.

If that all sounds a bit obvious and boring, it's because we think in spectra, graphs, and optimisation problems, which are all useful for making trivial stuff look complex.

I am afraid I must strenuously disagree: this is neither obvious nor boring.

Indeed it set me thinking. And reminded me of two things that I’ve wanted to blog for a while.

First, “you would only subscribe to this argument if you believed that politicians (idealists and cynics) were able to have NO effect on what the voting population, and thus the median voter, wants.”The sad thing is that too often it seems that centre left politicians do lack precisely this confidence. As a despairing Dick Morris once wrote of Bill Clinton: "He misses something elementary about leadership . . . You [Clinton] don't always have to tack to the polls. Our extraordinary eloquence and capacity to mould opinion can change how polls read and where the wind blows."

I’d be lying if I said that, while I respect the limits political realities place on short-term progressive change, I don’t feel the exact same way about the Labour party at present. Just occasionally (the teenage Sri Lankan asylum seeker being a good example; seabed and foreshore being another) it would be nice if they actually took a stand rather than withering in front of perceived public opinion.

Second, on the subject of positioning on the political spectrum, Tim’s point reminds me of a formulation that I came up with for trying to evaluate differing degrees of radicalism on the left.

I figured that you could plot any one person’s apparent position on the centre => left spectrum by adding the following vectors.

1. Their vision of utopia – what a just world would look like under ideal conditions.
2. Their vision of a humanly possible utopia – something that might be achievable in the long run taking into account the many fallibilities of humanity.
3. Their vision of what can plausibly be achieved in the short term.
4. What they view their role in achieving this.

I’m not sure that point 1 matters so much other than in the broadest sense. But 2,3 and 4 are critical.

Let’s use Rudd to illustrate this.

Under 2, I suspect that his vision of a humanly possible utopia is some kind of social democratic state, with the market and the state interacting to ensure that we live in an environmentally sustainable world where people are free to choose how to live their lives within reason while also being afforded thorough social insurance.

Under 3, I imagine that, in the short run – given factors such as the right wing tilt of much of Australian media, the ability of economic elites to resist radical reforms and Labor’s need for wealthy donors – Rudd’s vision probably starts to move considerably to the centre.

Under 4, because he has chosen to be a politician (rather than a lobbyist or an academic say) he moves further to the centre still – eager to reduce the number of points which the opposition can target him on.

I think that the fact that Rudd has, in the safest earliest days of his term in power, taken some vaguely bold liberal steps not all of which did he broadcast in advance of his election, shows the gap between 3 and 4.

Tim’s post also makes me think that I need to add a point 5 to my list: How genuine the person in question is. Some people do cynically crave power as an ends of its own rather than as a means to a more noble ends. How genuine a person really is also going to affect the stance they take.

Finally, I ought to note that there will be feedback between the points if level 3 causes you to say something long enough you may end up believing it at level 2 as well.

Ok – that was all a bit much for Sunday afternoon really.

For some light relief we have a Howard v Rudd rap battle. (Hat Tip: The Standard)

Keynes Says...

...of Hayek's Prices and Production:

It is an extraordinary example of how, starting with a mistake, a remorseless logician can end up in bedlam.

Sigh, smart people have all the best insults.

Hearts of Darkness (2)

Matt Taibbi writes:

In a much-ballyhooed example of favoritism, the White House originally installed a clown named Jim O'Beirne at the relevant evaluation desk in the Department of Defense. O'Beirne proved to be a classic Bush villain, a moron's moron who judged applicants not on their Arabic skills or their relevant expertise but on their Republican bona fides; he sent a twenty-four-year-old who had never worked in finance to manage the reopening of the Iraqi stock exchange, and appointed a recent graduate of an evangelical university for home-schooled kids who had no accounting experience to manage Iraq's $13 billion budget. James K. Haveman, who had served as Michigan's community-health director under a GOP governor, was put in charge of rehabilitating Iraq's health-care system and decided that what this war-ravaged, malnourished, sanitation-deficient country most urgently needed was … an anti-smoking campaign.

It gets much, much worse. Read the whole thing.

Having read it, it's very hard to disagree with Taibbi on the following point:

Operation Iraqi Freedom, it turns out, was never a war against Saddam Hussein's Iraq. It was an invasion of the federal budget, and no occupying force in history has ever been this efficient. George W. Bush's war in the Mesopotamian desert was an experiment of sorts, a crude first take at his vision of a fully privatized American government.

Talk About Co-Dependency

Meanwhile, in the darkest depths of the ocean:

To understand the full extent of the constraints that the abyss places on life, consider the black seadevil. It's a somber, grapefruit-sized globe of a fish—seemingly all fangs and gape—with a "fishing rod" affixed between its eyes whose luminescent bait jerks above the trap-like mouth. Clearly, food is a priority for this creature, for it can swallow a victim nearly as large as itself. But that is only half the story, for this description pertains solely to the female: the male is a minnow-like being content to feed on specks in the sea—until, that is, he encounters his sexual partner.

The first time that a male black seadevil meets his much larger mate, he bites her and never lets go. Over time, his veins and arteries grow together with hers, until he becomes a fetus-like dependent who receives from his mate's blood all the food, oxygen, and hormones he requires to exist. The cost of this utter dependence is a loss of function in all of his organs except his testicles, but even these, it seems, are stimulated to action solely at the pleasure of the engulfing female. When she has had her way with him, the male seadevil simply vanishes, having been completely absorbed and dissipated into the flesh of his paramour, leaving her free to seek another mate. Not even Dante imagined such a fate.

George Bush = Very, Very Bad Man (Issue number - oh I've stopped counting)

Anthony Lewis:

As governor of Texas he [Bush] indicated that judicial niceties were not at the top of his concerns. A study by the Chicago Tribune, published in June 2000, showed that he had refused clemency in all 131 death cases that had reached him. (Alberto Gonzales was legal counsel to Governor Bush and provided memoranda on clemency petitions.) Bush explained that the defendants had had "full access to a fair trial." In a third of those cases the lawyer who represented the defendant at trial or on appeal had been or was later disbarred or otherwise sanctioned.

It Became Known, with extreme suddenness and everywhere at once, that Eastasia and not Eurasia was the enemy

David Farrar in 2005:

Michael Crighton’s novel - State of Fear. This was a huge disappointment. He uses the novel to attack the credibility of the extreme environmental movement. Now I have no problems with that - they need to be attacked. But he overdid it by turning the novel into a lecture on the myths of global warming etc. For people like me who are already sceptics, it was way way overdone. Every second conversation of the characters was one person stating a well known ‘fact’ and then the hero demolishing it. Would have been okay once or twice, but in the end it destroyed the flow of the novel.

David Farrar in 2007:

National has just done a press release highlighting the hypocrisy of David Parker preaching overseas about the need to end global deforestation, when their own policies in NZ have led to deforestation...Deforestation contributes to global warming, so goes totally against the rhetoric of carbon neutrality.

[Emphasis Mine]

Now, I'm not the cynical type so I'm just sure that Dave's change in opinion on global warming must be more than opportunistic tacking with the wind shifts of the National Party. But seeing as I can't find any clear mea culpa's on Kiwiblog I'm left guessing as to what it might have been that sparked his epiphany. The latest IPCC report perhaps????

[missing text]

Neither Washington nor Tehran

Good commentary by Peter Tatchel.

The Iron Law of the Bagpipes...

...states that: the closer you get to the damn things the worse they will sound. From the other side of a drizzle-shrouded glen, bagpipes can, I imagine, sound something akin to beautiful (hmmm - you might want to make that two glens just to be safe). On the other hand, when they are being broadcast from close range (say the street outside your office) it is not possible for them to sound anything but like some form of war crime involving a chainsaw and a cat. Dear god, please make that busker stop...

What's the Matter With Markets

Via Mike Huben's ever useful Critiques of Libertarianism Website I stumbled across this post by Mark Thorma which does a great job of explaining the limitations of markets - particularly unregulated ones.

In order for markets to work their magic, there can be no externalities, no public goods, no false market signals, no moral hazard, no principle agent problems, and, importantly, property rights must be well-defined (and I probably missed a few). In general, the incentives that the market provides must be consistent with perfect competition, or nearly so in practical applications. When the incentives present in the marketplace are inconsistent with a competitive outcome, there is no reason to expect the private sector to be efficient.

...

There is nothing special about markets that guarantees that managers or owners of companies will have an incentive to use public funds in a way that maximizes the public rather than their own personal interests. It is only when market incentives direct choices to coincide with the public interest that the two sets of interests are aligned.

...

There is nothing inherent in markets that guarantees a desirable outcome. A market can be a monopoly, a market can be perfectly competitive, a market can be lots of things. Markets with bad incentives produce bad outcomes, markets with good incentives do better.

I believe in markets as much as anyone. But the expression free markets is often misinterpreted to mean that unregulated markets are all that is required for markets to work their wonders and achieve efficient outcomes. But unregulated is not enough, there are many, many other conditions that must be present. Deregulation or privatization may even move the outcome further from the ideal competitive benchmark rather than closer to it, it depends upon the characteristics of the market in question.

It's a good summary - read the whole thing - but I also think it misses the number one argument against laissez faire. This is simply that markets do not guarantee provision. Under a pure market based system the only guarantee of obtaining a certain good is to have the resources to purchase it. This is fine with hamburgers (in New Zealand at present), for example, because (a) they are generally affordable and (b) it's not the end of the world if you can't purchase them. This is not the case with health care on the other hand - treatment is costly and absence of treatment can be, well, deadly. Nor is it the case, in many developing countries (and even New Zealand in a recession), with regards to basic nutritional requirements. Under markets alone - there's no guarantee you can afford to eat and, if you can't, you're dead.

If this strikes you as a bad thing then you are going to want to live under a system governed by more than markets alone.

Capitalism, Society, Democracy

Tony Judt:

The market requires norms, habits, and "sentiments" external to itself to hold it together, to ensure the very political stability that capitalism needs in order to thrive. But it also tends to corrode those same practices and sentiments. This much has long been clear.^[10] The benign "invisible hand"—the unregulated free market—may have been a favorable inaugural condition for commercial societies. But it cannot reproduce the noncommercial institutions and relations—of cohesion, trust, custom, restraint, obligation, morality, authority—that it inherited and which the pursuit of individual economic self-interest tends to undermine rather than reinforce.^[11] For similar reasons, the relationship between capitalism and democracy (or capitalism and political freedom) should not be taken for granted: see China, Russia, and perhaps even Singapore today. Efficiency, growth, and profit may not always be a precondition or even a consequence of democracy so much as a substitute for it.

If modern democracies are to survive the shock of Reich's "supercapitalism," they need to be bound by something more than the pursuit of private economic advantage, particularly when the latter accrues to ever fewer beneficiaries: the idea of a society held together by pecuniary interests alone is, in Mill's words, "essentially repulsive." A civilized society requires more than self-interest, whether deluded or enlightened, for its shared narrative of purpose. "The greatest asset of public action is its ability to satisfy vaguely felt needs for higher purpose in the lives of men and women."^[12]

The Scorecard on Development: 25 Years of Diminished Progress

A while ago I wrote of Johann Norgberg's pro-globalisation ululating:
______________________________________________________________

[Norberg writes:]

...During the last 30 years, chronic hunger and the extent of child labour in the developing countries have been cut in half. In the last half century, life expectancy has gone up from 46 to 64 years and infant mortality has been reduced from 18 to 8 per cent. These indicators are much better in the developing world today than they were in the richest countries a hundred years ago.

In a generation, the average income in developing countries has doubled. As the United Nations Development Programme has observed, in the last 50 years global poverty has declined more than in the 500 years before that.

The trouble with these numbers is that, with the arguable exception of of the figure of hunger and child labour (based over the past thirty years), he is talking about data from a period of time (past 50 years, half century, generation) that includes not only the current 'era of globalisation' (which started in the mid 1980s) but also the post WW2 years, which were characterised by the Bretton Woods exchange system, considerably less trade integration than prior to the great depression or at present, and state led development policies. And it was these post WW2 years which in many developing countries saw the most rapid improvements in wellbeing.

Norberg's welcome to argue the case for more rapid global integration but it would be nice if he didn't muster as evidence statistics that are due in part, at least, to progress made in a period of time when a completely different approach to development and trade was being followed.

_________________________________________________________________

This paper by Mark Weisbrot, Dean Baker and David Rosnick is a good illustration of exactly what is wrong with Norberg's argument:

Over the past 25 years, a number of economic reforms have taken place in low and middle-income countries. These reforms, as a group, have been given various labels: ‘liberalization’, ‘globalization’ or ‘free-market’2 are among the most common descriptions. Among the reforms widely implemented have been the reduction of restrictions on international trade and capital fl ows, large-scale privatizations of state-owned enterprises, tighter fiscal and monetary policies (higher interest rates), labour market reforms, and increasing accumulation of foreign reserve holdings. Many of these reforms have been implemented with the active support of multilateral lending institutions such as the International Monetary Fund (IMF) and the World Bank, as well as the G-7 governments, and have often been required in order for countries to have access to credit from these and other sources. But regardless of origin, labels or political perspectives, there is a general consensus that the majority of developing countries have benefi ted economically from the reforms, even if they have sometimes been accompanied by increasing inequality or other unintended consequences (De Rato, 2005).

This paper looks at the available data on economic growth and various social indicators—including health outcomes and education—and fi nds that, contrary to popular belief, the past 25 years have seen sharply slower rates of economic growth and reduced progress on social indicators for the vast majority of low and middle-income countries.

Oh No...

This is not good. Not good at all.

All I can do is hope that the armoured polar bears make up for it...

Saturday Afternoon Darth Vader Funnies 2

Daniel Davies:

From D-squared Digest:

D-squared Digest -- FOR bigger pies and shorter hours and AGAINST more or less everything else: It is a strange fact about organisations that although we can put men on the moon and grow human ears on the backs of mice, there is no force on earth that can stop people from double-booking rooms. One of the most unrealistic things about Star Wars is that Darth Vader never swept into a conference room ready to do something dramatic and evil, only to find a bunch of IT people with sandwiches having their monthly planning meeting...

Saturday Afternoon Darth Vader Funnies

Episode 1, Paul Krugman:

Back when Hillary Clinton described Dick Cheney as Darth Vader, a number of people pointed out that this was an unfair comparison. For example, Darth Vader once served in the military.

Here’s another reason the comparison is invalid: the contractors Darth Vader hired to build the Death Star actually got the job done.

A

State Department project manager banished from Iraq by the U.S. ambassador and under scrutiny by the Justice Department continues to oversee the construction of the much-delayed new American embassy in Baghdad from nearby Kuwait, State Department officials disclosed Thursday.

James L. Golden, a contract employee, is still managing the $740 million project, said Undersecretary of State Patrick Kennedy, the department’s top management official.

“Mr. Golden is still . . . our project manager, and still is working with the contractor, at their base in Kuwait,” Kennedy said.

One State Department official with detailed knowledge of the unopened embassy expressed outrage that his superiors haven’t replaced Golden.

Clinton V Obama V Edwards

Ah yes, the Democratic primaries. In terms of policy, Edwards is my preferred candidate. Between Clinton and Obama, I'm not so sure. Obama is way, way, way better on foreign policy but his domestic policy positions - at least with regards to health care and social security - are not to great.

However, I have to confess, with the Republican candidate likely to be a religious fundamentalist or Rudy 'no really, I am more crazy than Bush on foreign policy' Giuliani, policy isn't the only thing influencing my choice. I want a Democrat who can win. Sure they won't be great once they get in, but at least they won't be actively coaxing our planet towards Armageddon.

I suspect that's what most Democrat voters want too. Which explains, perhaps, why they are currently looking most likely to select Hilary 'safe pair of hands' Clinton.

The crazy thing about this is that is - if polling is to be believed - she is actually much less likely to win:

While Clinton maintains her lead in national polling among Democrats, in direct matchups against Republican presidential candidates, she consistently runs behind both Barack Obama and John Edwards. In the recent national Zogby Poll (Nov. 26, 2007), every major Republican presidential candidate beats Clinton: McCain beats her 42 percent to 38 percent; Giuliani beats her 43 percent to 40 percent; Romney beats her 43 percent to 40 percent; Huckabee beats her 44 percent to 39 percent; and Thompson beats her 44 percent to 40 percent, despite the fact Thompson barely appears to be awake most of the time.

By contrast, Obama beats every major Republican candidate: He beats McCain 45 percent to 38 percent; Guiliani 46 percent to 41 percent; Romney 46 percent to 40 percent; Huckabee 46 percent to 40 percent; and, Thompson 47 percent to 40 percent. In other words, Obama consistently runs 8 to 11 percent stronger than Clinton when matched against Republicans. To state the obvious: The Democratic presidential candidate will have to run against a Republican.

Clinton's inherent weakness as a candidate shows up in other ways. In direct matchups for congressional seats, Democrats currently are running 10 percent to 15 percent ahead of Republicans, depending on the poll, while Clinton runs 3 percent to 7 percent behind -- a net deficit ranging from 13 to 22 percent. No candidate in presidential polling history ever has run so far behind his or her party.

To look at Clinton's candidacy another way, Clinton runs well behind generic polling for the presidency: In the NBC News/Wall Street Journal Poll conducted Nov. 1-5, 2007, voters were asked, "Putting aside for a moment the question of who each party's nominee might be, what is your preference for the outcome of the 2008 presidential election -- that a Democrat be elected president or that a Republican be elected president?" By 50 percent to 35 percent, voters chose "Democrat" -- a 15-point edge. Thus, Clinton is running 10 to 15 percent, or more, behind the generic Democratic candidate. This is not a promising metric nor the numbers of a strong candidate.

...

To be fair, it should be noted that not all polls find Clinton on the short end of polling disparities, and some have found her polling at parity, or sometimes even slightly ahead, of Republicans (generally, within the margin of polling error). But this should not obscure the main point: By every measure, Clinton's support runs well behind congressional Democrats, well behind generic Democrats and, generally, behind her Democratic presidential rivals in matchups with Republicans.

Message to Democrats: last election you chose safe, electable, foreign policy conservative John Kerry over a man who had a bit - and had a chance of eliciting a bit - of fire. Kerry was crap. He lost. Are you sure you want to repeat the same mistake?

From Liberation to Occupation. From Deceit to Death

Read this. Read this. Read this.

The picture they [the reviewed books] present is not always bleak. They describe many affecting scenes in which soldiers try to do good, administering first aid, handing out food, arranging for garbage to be picked up. For the most part, the GIs come across as well-meaning Americans who have been set down in an alien environment with inappropriate training, minimal cultural preparation, and no language skills. Surrounded by people who for the most part wish them ill and living with the daily fear of being blown up, they frequently take out their frustrations on the local population. It's in these firsthand accounts that one can find the most searing descriptions of the toll the war has taken on both US troops and the Iraqi people.

Wanna know how to create an Iraq worse than that governed by Saddam? Here's how: Launch a 'liberation' while not giving a shit about the people you are liberating. Plan poorly. Send in troops - fallible human beings who you have trained to kill dispassionately. Ask them to deal with all the complexities of occupation. Fail to support them...

A Bookmark

A critique of William Easterly's White Man's Burden.

(I've referred to it before but if you're interested, Amartya Sen's review is good too).

P.S Matt and Tim - I owe you both posts/replies. I'll write these over the weekend, I hope).

Subsidies: saving lives in Malawi (no thanks to the World Bank)

From the New York Times:

LILONGWE, Malawi — Malawi hovered for years at the brink of famine. After a disastrous corn harvest in 2005, almost five million of its 13 million people needed emergency food aid.

But this year, a nation that has perennially extended a begging bowl to the world is instead feeding its hungry neighbors.

...

Farmers explain Malawi’s extraordinary turnaround — one with broad implications for hunger-fighting methods across Africa — with one word: fertilizer.

Over the past 20 years, the World Bank and some rich nations Malawi depends on for aid have periodically pressed this small, landlocked country to adhere to free market policies and cut back or eliminate fertilizer subsidies, even as the United States and Europe extensively subsidized their own farmers. But after the 2005 harvest, the worst in a decade, Bingu wa Mutharika, Malawi’s newly elected president, decided to follow what the West practiced, not what it preached.

Stung by the humiliation of pleading for charity, he led the way to reinstating and deepening fertilizer subsidies despite a skeptical reception from the United States and Britain. Malawi’s soil, like that across sub-Saharan Africa, is gravely depleted, and many, if not most, of its farmers are too poor to afford fertilizer at market prices.

...

The country’s successful use of subsidies is contributing to a broader reappraisal of the crucial role of agriculture in alleviating poverty in Africa and the pivotal importance of public investments in the basics of a farm economy: fertilizer, improved seed, farmer education, credit and agricultural research.

Malawi, an overwhelmingly rural nation about the size of Pennsylvania, is an extreme example of what happens when those things are missing. As its population has grown and inherited landholdings have shrunk, impoverished farmers have planted every inch of ground. Desperate to feed their families, they could not afford to let their land lie fallow or to fertilize it. Over time, their depleted plots yielded less food and the farmers fell deeper into poverty.

Malawi’s leaders have long favored fertilizer subsidies, but they reluctantly acceded to donor prescriptions, often shaped by foreign-aid fashions in Washington, that featured a faith in private markets and an antipathy to government intervention.

In the 1980s and again in the 1990s, the World Bank pushed Malawi to eliminate fertilizer subsidies entirely. Its theory both times was that Malawi’s farmers should shift to growing cash crops for export and use the foreign exchange earnings to import food, according to Jane Harrigan, an economist at the University of London.

In a withering evaluation of the World Bank’s record on African agriculture, the bank’s own internal watchdog concluded in October not only that the removal of subsidies had led to exorbitant fertilizer prices in African countries, but that the bank itself had often failed to recognize that improving Africa’s declining soil quality was essential to lifting food production.

“The donors took away the role of the government and the disasters mounted,” said Jeffrey Sachs, a Columbia University economist who lobbied Britain and the World Bank on behalf of Malawi’s fertilizer program and who has championed the idea that wealthy countries should invest in fertilizer and seed for Africa’s farmers.

Here in Malawi, deep fertilizer subsidies and lesser ones for seed, abetted by good rains, helped farmers produce record-breaking corn harvests in 2006 and 2007, according to government crop estimates. Corn production leapt to 2.7 million metric tons in 2006 and 3.4 million in 2007 from 1.2 million in 2005, the government reported.

“The rest of the world is fed because of the use of good seed and inorganic fertilizer, full stop,” said Stephen Carr, who has lived in Malawi since 1989, when he retired as the World Bank’s principal agriculturalist in sub-Saharan Africa. “This technology has not been used in most of Africa. The only way you can help farmers gain access to it is to give it away free or subsidize it heavily.”

“The government has taken the bull by the horns and done what farmers wanted,” he said. Some economists have questioned whether Malawi’s 2007 bumper harvest should be credited to good rains or subsidies, but an independent evaluation, financed by the United States and Britain, found that the subsidy program accounted for a large share of this year’s increase in corn production.

The harvest also helped the poor by lowering food prices and increasing wages for farm workers. Researchers at Imperial College London and Michigan State University concluded in their preliminary report that a well-run subsidy program in a sensibly managed economy “has the potential to drive growth forward out of the poverty trap in which many Malawians and the Malawian economy are currently caught.”

Farmers interviewed recently in Malawi’s southern and central regions said fertilizer had greatly improved their ability to fill their bellies with nsima, the thick, cornmeal porridge that is Malawi’s staff of life.

In the hamlet of Mthungu, Enelesi Chakhaza, an elderly widow whose husband died of hunger five years ago, boasted that she got two ox-cart-loads of corn this year from her small plot instead of half a cart.

Last year, roughly half the country’s farming families received coupons that entitled them to buy two 110-pound bags of fertilizer, enough to nourish an acre of land, for around $15 — about a third the market price. The government also gave them coupons for enough seed to plant less than half an acre.

Malawians are still haunted by the hungry season of 2001-02. That season, an already shrunken program to give poor farmers enough fertilizer and seed to plant a meager quarter acre of land had been reduced again. Regional flooding further lowered the harvest. Corn prices surged. And under the government then in power, the country’s entire grain reserve was sold as a result of mismanagement and corruption.

Mrs. Chakhaza watched her husband starve to death that season. His strength ebbed away as they tried to subsist on pumpkin leaves. He was one of many who succumbed that year, said K. B. Kakunga, the local Agriculture Ministry official. He recalled mothers and children begging for food at his door.

“I had a little something, but I could not afford to help each and every one,” he said. “It was very pathetic, very pathetic indeed.”

But Mr. Kakunga brightened as he talked about the impact of the subsidies, which he said had more than doubled corn production in his jurisdiction since 2005.

“It’s quite marvelous!” he exclaimed.

...

Emphasis above is mine.

Speaking of Coyotes

On the subject of Wile E. Coyote, Paul Krugman must surely win the award for best economics metaphor for this effort at explaining why and when crashes occur:

So, according to the story, one of these days there will be a Wile E. Coyote moment for the dollar: the moment when the cartoon character, who has run off a cliff, looks down and realizes that he’s standing on thin air – and plunges. In this case, investors suddenly realize that Stein’s Law applies — “If something cannot go on forever, it will stop” – and they realize they need to get out of dollars, causing the currency to plunge.

My very own, very succinct...

...definition of an idealist:

Someone who believes that processes that appeal to a sense of justice (or possibly morality) will also lead to better outcomes in a consequentialist sense.

Arrrrharrrrhooouuueeeeeee.............

Some years ago I traveled to Greenland. Whilst there I ate a seal. I can't say I enjoyed it. Nor, I imagine, did the seal. But I did write a story about it. And, last year, that story won a contest. The prize: being sent on commission to write a story for AA Directions travel magazine.

The moment I heard this I started thinking big. Perhaps I could write about a road trip to the Wairarapa. Or the nascent restaurant culture in Waikanae. The magazine, however, was thinking bigger still. "Please," they asked, "go and investigate the Nelson Backpacking Scene".

No doubt they thought that any man who had been to Greenland would be a backpacker par excellence. This was true - once. Now it isn't. My backpack and I fell out a few years ago and haven't spoken since. But, the occasion - my first ever commission - was big. Bigger than the past. Bigger than our differences. So we negotiated a temporary reconciliation and accepted the commission.

That was when I saw the itinerary. A trip to Farewell spit. Kayaking in the Abel Tasman. The World of Wearable arts museum. Sky Diving. Sky Diving.

Which was a bit much. Even for my backpack.

Still it was my first commission. I couldn't say no. All I could do was hope the weather did that on the day.

It didn't. And so, in late October, I found myself spiraling up into the sky in a Cessna with a dangerously open door. 13,000ft up into the sky. Heading for a date with gravity.

Gravity which, when it came, did so with a rush. And a roar.

And fragmented thoughts, flying past me like small confused clouds.

Fuck.


I am

actually

falling.


Fuck.


Is there

an afterlife.


Will the seal be waiting for me there?


The answer to that last question was silence. Silence as clear as the air at altitude.

Silence because the parachute opened.

And all of a sudden dear reader I found myself suspended in a place that shouldn't be. But is. And is rather beautiful thank you very much.

Not so beautiful, mind you, that I'll be racing up there again any time soon. But not bad.

Funnily enough, the only sleepless night eventuating from the whole affair was the night after the jump, where recalling the truly disturbing feeling of pitching forward out of the plane and into nothing kept my heart and head racing late into the night.

Surely this could only occur in France...

...surely.

Hat Tip: Crooked Timber

Nasty, Brutal and Short

Writing in the Nation, Henry Farrell reviews Gomorrah, an expose of the Camorra crime syndicate, written by Italian journalist Roberto Saviano.

Roberto Saviano is a marked man. After writing Gomorrah and publicly denouncing the bosses of the Camorra, the organized crime network that dominates the Italian city of Naples and the surrounding region of Campania, Saviano began receiving death threats...Saviano's transgression in writing this savage and extraordinary book wasn't simply to identify the Camorra's bosses and their enablers. It was to break an unstated compact, a web of complicity that entangles politicians, businessmen, Mafiosi, judges and journalists and enriches many who participate. This unstated agreement has survived the corruption scandals of the 1990s, which centered on bribes paid to Italian politicians and destroyed the major political parties of Italy. It insinuates itself throughout Italian politics and business, not so much an active conspiracy as a tacit consensus that you shouldn't rock the boat by pointing at others' indiscretions and shady relationships. After all, someone else might in turn point their finger at you. And if you're honest: well, nobody's entirely honest, and even those who are can be smeared.

The whole thing is fascinating but, for now, two interesting points:

1. The Camorra and Neo-liberalism

Saviano indeed suggests that the Camorra's underlying logic is a kind of capitalism on overdrive. By his account, the clans of the Camorra take the lessons of modern business, the "post-Fordist" economy that provides flexibility without rules, and exploit them to their logical conclusion. The clans compete in a marketplace based on the threat of violence but also provide certain services more cheaply and effectively than law-abiding firms ever could...

In some ways, the Secondigliano clans resemble speculative capitalists--they are ruthless market operators who identify and seek to capitalize on gaps and potential efficiencies that other organizations have overlooked. Saviano describes how they pioneered new forms of drug market organization in southern Italy...

In describing the clan wars and how they were rooted in changes in market organization, Saviano sometimes seems to claim that the Camorra is driven by a simple desire for power and money. Yet Saviano also cuts against this interpretation, describing the ways the Camorra is hostage to its own myths. The kids in the lowest ranks of the Camorra, Saviano explains, don't "dream of being Al Capone but Flavio Briatore [a flamboyant and shady Italian businessman], not gunslingers but entrepreneurs with beautiful models on their arms; they wanted to become successful businessmen." Their bosses, in contrast, fashion a style based on American movies and borrow language from The Godfather. When Cosimo Di Lauro is caught by the police, he doesn't try to escape; instead he ties his hair into a ponytail (like Brandon Lee in The Crow) so as to present a bella figura for the journalists' cameras. The figures of the mobster and the businessman blend into each other; both are attractive not simply because they have money but because they have glamour, power and, most important, respect...

These stories, focused as they are on myths and the desire for victory and respect, are hard to reconcile with Saviano's image of the Camorra as a harbinger of an especially brutal and rationalized form of neoliberalism.

I'm not so sure. Granted this isn't the neo-liberalism of theory, but that doesn't exist anyway. And - violence aside - the Camorra as described don't strike me as being so different from quite a few of the people who I used to work among in finance. Sure there's a 'rational' desire for wealth and something very vaguely akin to market discipline. But there's also irrationality, vanity, striving for status etc. The Camorra sound entirely capitalistic to me. Depressingly so.

2. Hobbes

When the man who betrayed one of the Di Lauros was caught by his former comrades, he was tortured slowly with a spiked bat for hours, before having his ears cut off, his tongue cropped and his eyes gouged out with a screwdriver. He was finally done when his face was beaten in with a hammer and a cross carved on his lips.

Ever wondered what life without a social contract would be like? Hobbes famously thought it would be nasty, brutal and short. And I'd say that the world of organised crime provides good evidence that Hobbes was right. There is no Leviathan to oversea the rules of the game in the underworld - might is right. And might is violent.

Nasty, Brutal and Short

Goodbye Johnny.

And again - absolute property rights

A little while ago I pointed out that part of the trouble with an absolutist approach to property rights is that it is very hard to justify (actually impossible) if you can't prove that one's current allocation f property is justly acquired.

I recently thought of a pretty good example to illustrate this:

Someone steals your car. Two days later you find it and go to repossess it, but the thief says 'it's mine now; my property and I have a right to it'. Are you then in the wrong to take the car back? Of course not. How about if it was two weeks later or two years? No you'd still be in the right. The thief can't ever show that they legitimately possess the car and because of this they can't claim any entitlement to it.

Similarly, it is simply not possible to show that current distributions of property are the end product of legitimate processes. And, because of this, it is not possible to make any sort of absolute (deontological) claim to property rights. There's lots of good arguments for property rights, but they are consequentialist ones and, by their very nature, leave space for conditions and qualification.

Shame on Us...

This is a very very good essay.

Conservative Fixation Disorder

Oh Dear.

The Conservapedia was set up as an alternative to the irredeemably liberal Wikipedia. Over at Crooked Timber Keiran Healy points us to some web stats for the conservative open edit encyclopedia.

Seems like someone's got a fixation issue.

[Update: reading the comments below Kieran's post it seems quite possible, but not certain, that the high page views are a result of someone 'gaming' the site. Still, that doesn't explain how all the articles got there in the first place].

The Existence Dilemma

WARNING AMATEUR PHILOSOPHY FOLLOWS

I've always thought that one of the best arguments for the existence of god runs as follows:

"Nothing comes of nothing. How could the universe come into existence if something wasn't there to create it? There has to be something bigger than existence or existence itself couldn't exist."

To me this is a pretty convincing argument for some form of deity.

But there's a counter argument that runs like:

"If nothing comes from nothing then who created our creator? Your paradox is just as true for her/him/it as it is for us."

Which is rather hard to come back from.

And, ultimately, the debate just ends up being ontologically disturbing. If you believe that nothing springs from nothing then our existence seems impossible.

Yet here we are - existing.

Which all goes to show two things:

1. Somehow, something can spring from nothing

and

2. That there are some problems too great for reason alone...

or at least the reasoning of this amateur philosopher.

Homeopathy

Two splendid articles from Ben 'Bad Science' Goldacre on Homeopathy.

Key points:

1. In meta-analyses of genuine double blind trials homeopathy is not shown to be any more effective than placebos.
2. Homeopathy is in some cases still helpful - either via the placebo effect or, as was the case during a 19th Century Cholera outbreak in London, simply because it is less harmful than some of the other treatments on offer.
3. However, homeopaths' assaults on allopathic medicine are harmful of their own accord: there's evidence to show that homeopaths often advise against taking regular medication, which can be very harmful, particularly when the advice relates to things like Malaria prophylactics.

My own experience with homeopathy was that:

1. It - in all proability - did not help my arthritis.
2. The homeopath, and she is alone in this degree of certainty out of all the medical professions I have seen, claimed straight-up that she would cure me.
3. The homeopath advised me not to take Sulphasalazine. No real harm here, but it was a drug which did, end the end, help me for a short while. It also didn't do me any harm.
4. The same homeopath did, by all accounts, rid a friend's sister of her migraines.

As an aside - it really is a mistake to say something is 'just the placebo effect'. The placebo effect can have some remarkable results. Something, which leads into all sorts of fascinating discussions about the relationship between the mind and the body.

As I said to my GP recently about my most recent course of treatment, and the improvement it has ushered in: "well it might be the placebo effect, but please don't convince me of this".

Hari on Chavez

A bookmark for the most part: Johann Hari offers a good take on Hugo Chavez.

John Quiggin and the Death Penalty

Over at Crooked Timber John Quiggin makes the key point regarding claims of more death penalty less crime: it's an oft' repeated claim, but the data simply ain't there to show any death penalty deterrence effect.

As an aside, the key question of course is not only whether the death penalty deters crime but whether it does more cost-effectively then any other strategy that you could adopt.

Iron Law of the Comments Boxes - Number 27

----------------------------------------------------------
Iron Law of the Comments Boxes - Number 27
----------------------------------------------------------

In the same way that large piles of faeces attract blowflies,

any internet discussion that may plausibly be diverted onto

the subject of race and intelligence will attract Steve Sailor.

Oh, and Brad Delong has a great post putting to rest race and intelligence arguments.

The Songs Remain the Same

Meanwhile, the house journal of the US political establishment, The New Republic, enthuses over Led Zeppelin. While disagreeing with TNR is something all caring people should try and do at least once a week I can't find too much to disagree with. Heck, I was utterly enjoying Good Times Bad Times driving home from the Wairarapa yesterday - almost 20 years after a music savvy friend of mine put me onto the tune.

I've got a few quibbles of course: it's true that Led Zeppelin did the world favour by not becoming a bloated touring band playing covers of themselves like the Rolling Stones did, but it's nonsense to argue that the Led Zep are in someway more timeless than Jagger et al. (certainly more so than Deep Purple but that's not exactly an achievement).

Also, any honest fawning over Led Zeppelin ought to at least make note of the fact that the band was responsible for some of the worst lyrics of all time. "It was in the darkest depths of Mordor, I met a girl so fair"? Please.

Still I guess it is indicative of how good the songs are: you find yourself singing along fully aware that you are mouthing utter nonesense mascarading as bad poetry. That's pretty good.

My very own*, very succinct, definition of social capital

A society's social capital is the sum total of all the unselfish acts* that it's members perform.

_____________
* At least I haven't read it anywhere, but I haven't read that much on the topic.
** I'm not sure yet whether this includes acts of enlightened self interest or only altruism.

Problem and Solution: the UN in a world of conflict

I'm going to be too busy to post much over the next few weeks so I thought, in order to keep the blog ticking over, I would re-post a few things I've written elsewhere.

The following post is from the DevNet Forum. If you wish to comment on it, do me a favour and do so over there.

_____________________

In a recent review of two books on the United Nations journalist and academic Samantha Power relays the following anecdote which reveals much about relationship between the world’s most powerful nation and the world’s main body of global governance.

The new year marks the end of two turbulent terms at the United Nations: that of Kofi Annan, who served 10 years as secretary general, and that of John R. Bolton, who lasted just 17 months as the U.S. ambassador there. When Bolton was asked about a December 2006 farewell dinner that President Bush held for Annan, the departing American diplomat sniped, "Nobody sang 'Kumbaya.'"...When told of Bolton's remark, Annan laughed and said, "Does he know how to sing it?"

That Bolton could say such a thing about the head of the organisation he was ambassador to isn’t entirely surprising. Bolton has a reputation for being abrasive and even before his appointment as ambassador his public utterances about the UN suggested that he was not, perhaps, the organisation’s biggest fan. (Echoing Margaret Thatcher’s thoughts about society he once claimed that: “[t]here is no such thing as the United Nations. There is only the international community, which can only be led by the only remaining superpower, which is the United States”. On another occasion he said, “[i]f the UN Secretariat building in New York lost ten storeys, it wouldn’t make a bit of difference.”)

Similarly, the fact that the Bush administration could appoint an apparent unbeliever as its representative to the United Nations in 2005 came as no surprise to anyone who had observed the relationship between the multilateral body and the unilateral president in the years since Bush took office. The ultimate bust up being, of course, over the Iraq war.

Perhaps more than anything else it was the invasion of Iraq that politicised debates about the United Nations. To many opponents of the invasion, by attacking a country without UN sanction, the United States and its allies were setting a dangerous precedent and tearing up the ‘rulebook of international affairs’ (whether such a ‘rulebook’ ever actually existed is another question altogether). While, to many of the invasion’s supporters, the mere fact that the organisation would dare stand in the way of such a noble and necessary endeavour was a source of rage. In reality, the UN Security Council’s refusal to endorse the invasion posed scant hurdle to the world’s sole super power; yet supporters of the war dredged up a long list of ‘UN failures’ from the Balkans to Rwanda which they claimed illustrated the organisation’s venality and ineffectiveness. And showed why the United States was justified in bypassing it in its march to war.

As arguments for the invasion of Iraq these claims struck me as either disingenuous or besides the point at the time; however, underneath all the sound and fury I think that there is really interesting question waiting to be discussed. This is not the simplistic is “the UN good or bad?” – but rather, and this the question that Samantha Power focuses on in her review, the question of whether the UN is better than, worse, or simply the sum total of, its parts. In this argument, supporters of the organisation argue that it does its best, constrained not by organisation staff or structure but rather by fickle member states acting too often in their own self-interest. The UN failed, they argue, in Rwanda not because of anything to do with the UN but rather through French intransigence and the timidity of president Clinton who, nose bloodied in Somalia, did not want more American troops dying in Africa. Likewise, it failed in the former Yugoslavia because Western Nations were unwilling to commit sufficient resources to peacekeeping. In short, defenders argue, the United Nations does its best – and it has had successes to accompany its failures – in a world of real politic and rogue states. This, by the sounds of Power’s review is the tone of the book ‘The Best Intentions: Kofi Annan and the UN In the Era of American World Power’ by James Traub.

On the other side of the fence are people like Adam LeBor who – in his book ‘Complicity With Evil: The United Nations in the Age Of Modern Genocide’ – argues (if Power’s characterisation is correct) that the UN does have power of its own and, too often, has squandered it.

Power’s review is excellent, mediating carefully between the two different sides

The trouble with leaning exclusively on either Traub's or LeBor's approach is that the distinctions between the United Nations as a building and the United Nations as an actor are blurry: The United Nations is, of course, both things at once. Although Traub acknowledges this, he sometimes gives U.N. civil servants the very free pass they give themselves, portraying Annan, for example, as "unfairly blamed for failures not of his own doing." In fact, U.N. officials can deserve blame. They raise false hopes of protection that they -- but not the civilians under their watch -- know they will not be able to keep. They self-censor for fear of getting too far out in front of the member states. In so doing, they hoard information to which only they have access and miss important opportunities to affect the domestic political debates that will ultimately shape the will of the major powers. Instead of taking personal responsibility, many U.N. officials engage in what LeBor rightly condemns as "buck passing." They also too frequently become what the U.N. critic David Rieff has called "cultists of the small victory," losing sight of the burning forest while scurrying around in search of the seed to plant a single tree. But LeBor neglects to mention that U.N. officials who condemn aggression, corruption or atrocities without the consent of powerful governments do not survive in the U.N. system. Annan himself nearly lost his job. As Traub documents, the Republican campaign to string up the secretary general for his role in the oil-for-food scandal grew virulent only after Annan made the obvious point that, lacking Security Council authorization, the U.S. invasion of Iraq was "illegal." To gauge the relative responsibility of the organization, it might be helpful for U.N. bashers to ask, "But for Kofi Annan or the presence of U.N. peacekeepers, would the response of the countries on the Security Council have been any different in Bosnia, Rwanda or Darfur?" The answer, sadly, is no. (Although it's not credited in LeBor's account, Annan's office has spoken out more about Darfur than almost any government.) And by homing in almost exclusively on the United Nations, as LeBor has done, rather than pinpointing the responsibility of the countries with the armies, the financial leverage and the diplomatic clout to stop these horrors, his book could have the effect -- perhaps unintended -- of absolving those best positioned to make a difference. Governments that claim to be dismayed that the "United Nations" has not halted the rampaging Janjaweed militiamen in Sudan should look less at the world body and more in the mirror.

And it seems sensible to me (I’d add to Power’s discussion the simple point made by Conor Foley here that, on top of everything else, working in conflict situations often leaves the UN with choices only between different bad alternatives). But I’m not expert on the UN so I’d love to hear your thoughts.

Great Southern Land

And I've just returned from a few days in Australia. Several quick thoughts:

1. If you're ever inclined to believe that Australia is a cultural wasteland have a listen to ABC radio - it's a very impressive station.

2. Gosh Australia is different from New Zealand. Culturally, I think it's every bit as different as the United Kingdom is. I really don't find much in common between NZ and Aus. (note this isn't a criticism of Australia). It's also so, so different geographically. I can't get over how old and empty the land feels compared to New Zealand. And the beauty that comes with this is really quite something.

3. Drought. Big time.

Projectile Dysfunctional Disorder

Thanks to Tim, I just read this post on the Greens blog. Very funny looking graphs and fairly convincing evidence that Treasury and the Reserve Bank might want to pay more attention to peak oil folks when they undertake their inflation next forecast.

post missing

Oh thank God...

...for this.

What Makes an Activist Tick

post missing

No Wonder...

...I feel tired.

I just counted; I've sent approximately 65 emails today at work. Only about 5 of them being non work related or non-serious.

Counting the number of emails you have sent in a day is an interesting exercise. It certainly answers a few of those 'where did my day go questions'.

Spend the Surplus

Despite the much of our media having spent the last few years playing the part of the tax cuts lobby the New Zealand public has different ideas:

More support public spending than tax cuts

Research New Zealand is surprised at the results of its latest poll, which asked whether the Government should spend its cash surplus on tax cuts or public services.

Director Emanuel Kalafatelis says 48 percent of respondents said they want the Government to spend the surplus on public works, while 37 percent want it spent on tax cuts. He says people living in major urban areas are more likely to support increasing spending on public works than those in smaller towns.

Mr Kalafatelis says twice as many people with tertiary qualifications supported the surplus being used for more public services than those with no qualifications.

The poll was taken following the Government's announcement it has a multi-billion dollar cash surplus in early October.

Me, if the choice is the one presented above, I'm with the majority of New Zealanders: what we need now is more spending on things like health not lower taxes. Of course, if we are to follow sound macro-economic policy, then we should keep the surplus until inflationary pressures ease and fund additional spending from increased taxes (this is my preferred position). But if we have to break from best practice, I'd prefer we invested in health and education, not tax cuts .

Contradictions

New Zealand's Council for International Development has just published its annual survey of New Zealanders' attitudes towards aid.

This little contradiction caught my eye:

General approval of the New Zealand Government providing overseas aid remained at 2004 levels, with a high 76% approving, and only 14% disapproving. Approval remained high for all demographics, although decreased slightly with age.

On the other hand...

Confidence in the effectiveness of overseas aid, whether provided through NGOs or by Government, was again limited. 39% expressed confidence that New Zealand‟s non-Government aid organisations actually help people in poorer countries, while 24% were not confident.

Confidence in the effectiveness of aid from the New Zealand Government was even lower, with 29% expressing confidence that it actually helps people in poorer countries.

So the majority of New Zealanders approve of doing something that they don't think does any good. Oh well, I guess you have to admire their moral commitment even in the face of personal doubt...

More seriously, this, I think, points to an area that New Zealand's international development community needs to work on: publicising its success stories. Aid is not a panacea, nor is it always easy to get right, but good aid can work. And aid has some big successes to its credit. It would be nice if we could let the New Zealand public know this.

George Bush = Very Bad Man (example 1,356,987)

In one of the first of his many destructive acts, George Bush signed into legislation the Global Gag rule; a law which prohibited US aid money going to any organisation that does anything related to abortion (even if it is only offer advice or counseling).

Population Action International have a helpful little snapshot of the impacts of this.

At a heavily attended briefing in Congress last week, renowned experts Dr. Joachim Osur, of the Ipas African Alliance, and Matilda Owusu-Ansah, formally of the Planned Parenthood Association of Ghana (PPAG), addressed the damaging effects of the Global Gag Rule—highlighting the real, direct, and, more often than not, deadly impact of this policy in their respective countries.

According to Ms. Owusu-Ansah, PPAG, the largest provider of family planning services before imposition of the Global Gag Rule, lost all USAID family planning funding. Within one year, their condom distribution fell by 40%. With limited access to reproductive health supplies and services, the number of unintended pregnancies increased dramatically, as well as the number of new sexually transmitted infections.

In Kenya, the effects of the Global Gag Rule have been equally detrimental. When the policy was reinstated, Dr. Osur was working for the Family Planning Association of Kenya (FPAK). When FPAK refused to sign, they immediately lost 58% of its annual budget. These budget cuts forced the closure of eight of FPAK’s 16 clinics, leaving 100,000 women without access to reproductive health services—including the contraceptives that would help them avoid unintended pregnancies, abortion and STIs.

According to the Bush administration, the Global Gag Rule was reinstated in 2001 to prevent abortions worldwide. In reality, the effect has been quite the opposite. In addition to creating contraceptive shortfalls and closing reproductive health clinics, Ms. Owusu-Ansah reported that PPAG saw at 50% increase in the number of women who came to their clinics for post-abortion care. By denying access to reproductive health services and contraceptives, the number of unintended pregnancies grew, often leading to abortion.

The US congress is currently trying to override the global gag rule. If they do this Bush has promised to veto the entire US aid budget. Nice guy...

When Nanny States Get Nasty

Over at New Zealand's first ever economics blog 'The Visible Hand in Economics' Matt Nolan discusses externality taxes - in particular taxes on cigarettes.

An Otago university study that was sponsored by anti-smoking groups found that cigarette taxes should be increased. We know that an externality tax is a good thing, however 70% of the price of cigarettes is made of of taxes already. The question then is, do we need more cigarette taxes to set the social cost of smoking equal to the social benefit, are we at the social optimum, or have we already gone too far. Where the price is relative to the social optimum is an important question. If the price of cigarettes is already at or above the socially optimal level, further cigarette taxes will be inefficient.

Now I have no idea where we are in terms of social cost and social benefit. Ultimately, if the money from cigarette taxes can cover all the additional health expenditure from smoking, then the tax is sufficient.

People know they are killing themselves with cigarettes, so if that is what they want to do we should let them. The problem is that they negatively influence other peoples health and put a drain on the health system by getting sicker than people who do not smoke. If the tax on cigarettes already covers all this, then I don’t want them to lift taxes anymore. The goal of the cigarette tax should be to cover the externalities of smoking, not trying to stop consumption completely.

As someone who thinks that John Stuart Mill's famous dictum ("[T]the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not sufficient warrant") is a pretty good (if not perfect) rule of thumb for state intervention, I'm sympathetic to Matt's view. Instinctively, I am inclined to agree; yet when I think about it more I'm not so sure.

Firstly, even working within Mill's framework, and also limiting ourselves to justifications of taxation in terms of externalities, we can potentially make a case for taxation above and beyond that which covers costs to the health system associated with active and passive smoking. This is because the harm associated with smoking is not just the physical harm of cancer and emphysema, but also the financial, time-related, and emotional harms inflicted on family members, care-givers and friends. Of course, putting a price tag on such harms is incredibly difficult, but this doesn't mean that they aren't real. And while, quite possibly, difficulties in placing a price on these additional externalities provides a practical reason for not pricing them at all, we do need to be explicit about this and the limitations it places on any fairness claims we make.

Secondly, buried in Matt's point that, "[p]eople know they are killing themselves with cigarettes, so if that is what they want to do we should let them" are some tricky questions about choice and will. Questions which start to expose - I think - the limitations of a liberal framework based on Mill's dictum.

To see what I mean let's re-phrase Matt's statement to get the key word 'choice' in there: "People know the risks of smoking. If they choose to smoke knowing these risks, once we have accounted for the costs imposed on the rest of us, then they are entitled to their choice."

The first problem with this is the a question of choice: to what extent to people actually - individually and of their own accord - choose to smoke? We know that people have the potential to act rationally in their own best interest. But we also know that there are a near infinite number of influences which may stop them from doing so. In the case of smoking we have: learned behaviour (in the children of smokers); peer pressure (I don't know where Matt went to school , but in the backwaters of the Lower Hutt where I was educated, smokers were cool); advertising; and - of course - the addictive nature of tobacco. With all these influences how accurately can we claim that anyone actually individually chooses to smoke. And, if individual choice doesn't exactly exist, is it really wrong for us collectively to try and establish some countervailing influences. After all, they may actually get us closer to the ideal of choice.

The second problem - and this, I have to confess, is something that I haven't full got my head round yet - is choice across time. Every moment of our lives we make choices; some we can undo, some - thanks to time's arrow - we can't, no matter how much we later regret them. Later in life we may have completely different preferences than we had when we were younger. We may choose to get that tattoo removed. We may choose to stop smoking. We may not, however, be able to reverse the damage done to our lungs. If only it were possible, we might choose to travel back in time and change choices we made. If a juvenile choice (to start smoking) and a mature choice (to live to see our grandchildren grow) are at odds with each other, hypothetically speaking, which set of choices should be given preference. Almost certainly, our mature choices will be made in the possession of more information (until we start forgetting it all), so perhaps they are better choices?

As an example consider the following:

Milton and I are friends at high school. Despite being suspicious of my communitarian leanings, Milton respects my opinions and is often influenced by them. One day, I discover that Milton has started smoking. I seriously consider talking him out of it, but decide to respect his individualist leanings.

Many years later Milton is dying of lung cancer. It is causing him immense anguish - particularly the knowledge that his wife and kids will not be provided for. At one point Milton exclaims "oh Terence, I wish you had talked me out of becoming a smoker at high school".

Mercifully, thanks to an unfortunate accident in an Econ 415 class, in the intervening years I was been given the ability to time travel and can undo Milton's juvenile choice, respecting his mature reasoning.

Would I be wrong to then travel back in time to physically prevent Milton's from smoking?

We can't time travel, of course, (not even those of us taught by Geoff Bertram) but we can make predictions about the future and, if we have every reason to believe that choices made in the present may be regretted by people's future selves, are we really wrong to want to influence them?

Choice, it seems, is an awfully tricky beast to pin down once you start thinking about it.

There is, however, a strong, and simple, counter-argument to my points above though: states stand on slippery slopes. And the more excuses we give them to intervene in our individual lives the more we increase the scope for abuse and illegitimate coercion.

For this reason, perhaps, even acknowledging, the limitations of Mill's dictum and conventional views of choice, we might still continue to use them as rules of thumb because the moment we discard the primacy of individual choice (either because we think we know better or through an over-zealous desire to eliminate negative externalities) we open a door through which abuses of power can be ushered in. Everyone regrets something they've done when they are drunk, therefore we should ban drinking. Spiky green hair upsets me, therefore we should tax it as a negative externality. On a larger scale this is the exact sort of reasoning that was used to justify communism (false consciousness) and fascism (the individual is subsumed to the needs of the fatherland) .

This is a very strong counter argument and it is the main reason why, despite its limitations, I think that Mill's dictum is a worthwhile rule of thumb in many instances. But, at the same time, I'm not totally convinced. After all, in line with my arguments above, we break Mill's dictum all the time (suicide is illegal, we have responsible drinking advertisements, we probably do tax cigarettes in a behaviour modifying manner not just to internalise externalities) and, despite what some conservative blogs might have you think, there are no gulags in New Zealand; nor gas chambers.

Just when and to what extent we should intervene collectively in the name of others' welfare isn't something that is easily decided on, but functioning democracies (and, heck, even moderately dysfunctional ones such as our own) actually do a reasonable job of it most of the time.

This surprises me somewhat, but hey, it happens. And, because of this, I'm willing to consider some welfare interventions at least.

The (Doesn't Acutally Care About) New Zealand Institute

Silly thinking from the New Zealand Institute:

New Zealand should be a "fast follower" and not a leader in the race to reduce greenhouse gases, says a report issued today.

The New Zealand Institute report recommends the country delay meeting its emission reduction targets under the Kyoto Protocol to 2020, instead of 2012.
…

New Zealand ratified the Kyoto Protocol five years ago.

It requires the country to meet emissions targets between next year and 2012, or buy carbon credits on the international market to cover the difference.

The Government believes New Zealand will exceed its target by about 12 per cent.

The Treasury estimates that will cost $700 million, but that figure will rise if emissions are higher than expected, the cost of carbon credits is higher than predicted, or if the exchange rate falls.

Dr Skilling recommends deferring until 2020 New Zealand's commitment to meeting the Kyoto target of limiting greenhouse gas emissions to 1990 levels.

He acknowledged that reversing an international commitment would damage New Zealand's reputation as a good international citizen, but said other countries were likely to be in the same boat.

Canada had already announced it would not be bound by its Kyoto commitments because of the costs associated with failing to reach its target."

700 million dollars is approximately 0.45% of GDP, but hey, no price to small to not save the planet...

The real problem with the NZI's logic is the fact that if we hang back and wait, while we may gain some sort of infinitesimal competitive advantage, we also increase the chances that everyone will do the same. And if that happens, trust me, the cost is going to be considerably higher than 0.45% of GDP.

The reason why our hanging back will influence others is as follows:

There is no international enforcement mechanism to compel countries to follow Kyoto, or take make GHG emissions reductions. This is one of the paradoxes of globalisation - we only have the barest skeleton of a global political infrastructure so, when we desire collective action, we have to rely on soft power. In this case the soft power in question is the domestic environment lobby of other countries. And every time we don't act we weaken their hand, and strengthen their opponents - who can claim that seeing as New Zealand isn't doing it their country doesn't need to act either.

Indeed, that is exactly what Skilling does above:

He acknowledged that reversing an international commitment would damage New Zealand's reputation as a good international citizen, but said other countries were likely to be in the same boat.

Canada had already announced it would not be bound by its Kyoto commitments because of the costs associated with failing to reach its target.

If Skilling gets his way then somewhere else in the world they'll be saying "well Canada and New Zealand have reneged, we should too."

When it comes to our planet's future, it's worth being a leader not a follower. Even if it costs us (less than half a cent in every dollar we earn).

[Update: And Norigthturn lands the death blow for the NZI's silliness pointing out that:

But quite apart from their strange definition of "slowing down" - I'd have thought that unilaterally abandoning Kyoto would count as "stopping dead in the water" - there's also the fact that their entire analysis is predicated on the idea that New Zealand will somehow be "leading the world" if we implement climate change policy. And this is simply false. To pick my favourite example, Norway - the real "world leader" on climate change - started pricing carbon fifteen years ago. The European Union has been trading carbon since 2005 (though overallocation means it has been less effective than it could have been - a mistake we hopefully won't be making here). By contrast, we won't have even the rudiments of an emissions trading scheme until 2010. To claim that this would somehow be "leading the world" displays either a complete ignorance of international policy, or a deliberate attempt to mislead the public.

The inconvenient truth is that even if the government implements its entire programme of emissions trading and regulation, we will not be a "world leader". We will not even be a "fast follower". Instead, we will be playing catch-up after 15 years of sitting on our hands doing nothing, and implementing measures that other countries implemented long ago.

Perhaps the 'think' in thinktank is meant to be ironic?]

All we Need is Growth (Douglas Adams version)

A while ago I wrote about the poverty of the way we discuss economic growth here in New Zealand. I've just added the following extract from the Hitch Hiker's Guide to the Galaxy to the post. Douglas Adams nails it in one:

The planet has - or rather had - a problem, which was this: most of the people living on it were unhappy for pretty much of the time. Many solutions were suggested for this problem, but most of these were largely concerned with the movements of small green pieces of paper, which is odd because on the whole it wasn't the small green pieces of paper that were unhappy.

In Praise Of Higher Taxes (or, to be more exact, a higher top tax rate)

Sigh...meanwhile over at Kiwiblog David Farrar is getting excited about tax cuts:

As I have said many times, most left wing parties do not share NZ Labour’s ideological hatred of reducing tax. I doubt one could find another party in the world that has had surpluses as high as NZ’s, and they’ve refused to lower personal tax rates.

Australian Labor leader Kevin Rudd has endorsed almost every element of Peter Costello’s massive tax cuts. The only difference is with the rate for those earning over $180,000.

All of which is painfully disingenuous. Rudd, in case anyone hasn't noticed, is in the middle of an election campaign. Who knows what his actual thoughts on tax cuts are but I rather suspect that right now he is concentrating on ducking his opponent's king strategic hit - as opposed to expressing an honest yearning for a low tax economy. Moreover, as the Standard points out Michael Cullen has entirely pragmatic reasons for for caution on tax cuts.

Prior to the last election, I wrote why I think tax cuts would be a very bad idea. I wasn't the only one making these points at the time, yet I have yet to hear anything resembling a persuasive counter argument from tax cut types. This, I think, is suggestive of the existence of blind ideology about tax cuts.

Anyhow, buried away in the Kiwiblog post is a fact that does point to a sensible critique of Labour's record on taxation (missed entirely by DPF, of course). This is the fact that Australia has an additional high-tax threshold which we don't have in New Zealand. People earing over AU$150,000 currently pay 45c on every additional dollar earned.

There are two simple reasons why this is a great idea and why it is to Labour's detriment that they never created an additional tax bracket similar to this:

Reason 1: It brings in more money. From people who can afford to pay it. People earning over NZ$150,000 currently contribute 16% of our total income-tax take; increasing the amount they pay, even assuming some increased avoidance behaviour, could contribute handily to the government's coffers. This, in turn, could either pay the way for increased future government spending (and, believe me, with an aging population there is no escaping this, unless you want to cut key services) or it could be used to fund something like the introduction of a tax free threshold so that those earning lower incomes had more money in their pockets after tax.

Reason 2: It would help, in some small way, in tacking inequality in New Zealand. I keep meaning to write explaining why inequality is not just a problem that concerns socialists; one day hopefully I'll get round to it. However, for now I'll just point you to this post from Chris Bertram which sums up most of the problems with high levels of inequality. And these are problems that should concern us here in New Zealand. New Zealand is a relatively unequal country by OECD standards. It is also a country that has experienced a significant rise in inequality since the 1980s.

[text missing]

(If you're interested Robert Reich makes a similar argument in the US context here).